Executing for Growth and Returns Outlook Investor Presentation Second Quarter 2014

Transcription

1 Executing for Growth and Returns 2014 Outlook Investor Presentation Second Quarter 2014

2 Introductory Information Unless otherwise specified, the information in this presentation, including forward looking statements related to our outlook, is as of our most recent earnings call held on July 17, We make no commitment to update any such information contained in this presentation. Certain statements in this presentation are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, known as the PSLRA. These statements can generally be identified by the use of forward-looking terminology such as "believe," "expect," "may," "will, "should," "seek," "on-track," "plan," "project," "forecast," "intend" or "anticipate," or the negative thereof or comparable terminology, or by discussions of vision, strategy or outlook. These statements are based on current plans, estimates and projections, and, therefore, you should not place undue reliance on them. No forward-looking statement can be guaranteed, and actual results may differ materially from those projected. Factors that could cause actual results to differ materially from those projected include, but are not limited to, the following: (1) the challenges associated with past or future acquisitions, such as undiscovered liabilities, costs, integration issues and/or the inability to achieve the cost and revenue synergies expected; (2) a slowdown in the recovery of North American construction and industrial activities, which decreased during the economic downturn and significantly affected our revenues and profitability, could reduce demand for equipment and prices that we can charge; (3) our significant indebtedness, which requires us to use a substantial portion of our cash flow for debt service and can constrain our flexibility in responding to unanticipated or adverse business conditions; (4) the inability to refinance our indebtedness at terms that are favorable to us, or at all; (5) the incurrence of additional debt, which could exacerbate the risks associated with our current level of indebtedness; (6) noncompliance with covenants in our debt agreements, which could result in termination of our credit facilities and acceleration of outstanding borrowings; (7) restrictive covenants and amount of borrowings permitted under our debt agreements, which could limit our financial and operational flexibility; (8) a decrease in levels of infrastructure spending, including lower than expected government funding for stimulus-related construction projects; (9) fluctuations in the price of our common stock and inability to complete stock repurchases in the time frame and/or on the terms anticipated; (10) our rates and time utilization being less than anticipated; (11) our inability to manage credit risk adequately or to collect on contracts with customers; (12) our inability to access the capital that our business or growth plans may require; (13) the incurrence of impairment charges; (14) our dependence on distributions from subsidiaries as a result of our holding company structure and the fact that such distributions could be limited by contractual or legal restrictions; (15) an increase in our loss reserves to address business operations or other claims and any claims that exceed our established levels of reserves; (16) the incurrence of additional costs and expenses (including indemnification obligations) in connection with litigation, regulatory or investigatory matters; (17) the outcome or other potential consequences of litigation and other claims and regulatory matters relating to our business, including certain claims that our insurance may not cover; (18) the effect that certain provisions in our charter and certain debt agreements and our significant indebtedness may have of making more difficult or otherwise discouraging, delaying or deterring a takeover or other change of control of us; (19) management turnover and inability to attract and retain key personnel; (20) our costs being more than anticipated, and the inability to realize expected savings in the amounts or timeframes planned; (21) our dependence on key suppliers to obtain equipment and other supplies for our business on acceptable terms; (22) our inability to sell our new or used fleet in the amounts, or at the prices, we expect; (23) competition from existing and new competitors; (24) disruptions in our information technology systems; (25) the costs of complying with environmental, safety and foreign laws and regulations; (26) labor difficulties and laborbased legislation affecting labor relations and operations generally; and (27) increases in our maintenance and replacement costs, and/or decreases in the residual value of our equipment. For a more complete description of these and other possible risks and uncertainties, please refer to our Annual Report on Form 10-K for the year ended December 31, 2013, as well as to our subsequent filings with the SEC. The forwardlooking statements contained herein speak only as of the date hereof, and we make no commitment to update or publicly release any revisions to forward-looking statements in order to reflect new information or subsequent events, circumstances or changes in expectations. Note: This presentation provides information about free cash (usage) flow, EBITDA, adjusted EBITDA and adjusted EPS, which are non-gaap financial measures. This presentation includes a reconciliation between free cash (usage) flow and GAAP cash flow from operations, a reconciliation between both adjusted EBITDA and EBITDA, on the one hand, and GAAP net income, on the other hand, a reconciliation between both adjusted EBITDA and EBITDA, on the one hand, and GAAP cash flow from operations, on the other hand, and a reconciliation between adjusted EPS and GAAP EPS. (Information reconciling such forward-looking non-gaap financial measures is unavailable to the Company without unreasonable effort.) 2

3 Table of Contents Introduction 4 Market Overview 11 Margin Enhancement 16 Growth Through Customer Solutions 28 Fleet 35 Financial Overview 41 3

4 is the Industry Leader, Creating a New Standard for Operational Execution to Drive Growth and Returns Through the Cycle 4

5 Equipment Rental Leader #1 U.S. Market Share Other 78% United Rentals 12% HERC 5% Sunbelt 5% 883 locations across North America Diversified mix Industrial/Non Construction 55% Non-Residential Construction 41% Residential 4% Team of 12,400 employees Scale Creates Distinct Competitive Advantages and Higher Quality Services for Customers 5

6 Creating a New Industry Standard Our Vision Deploying the best people, equipment and solutions to enable our customers to safely build a better and stronger future Driven By These Values Safety First Leading By Example Continuous Innovation Integrity Passion for People Community Minded Will Result In Superior returns to our stockholders by achieving strong and consistent financial performance 6

7 Our Four Pillar Strategy for Success Grow the Core New Standard for Operational Execution Expand Specialty Businesses Fill Growth Pipeline National Account Strategy Total Control Market Leadership Penetrating high return markets Growing industrial customers Customer Service model Most advantaged cost position Best execution at the branch Significant improvements in productivity Grow cross-sell and customer relevancy Expand key categories Trench Tools Power & HVAC Invest in highreturn M&A Invest in related adjacencies, such as tanks or pumps High customer overlap Shared capability Attractive returns Evaluate international opportunities Driving Growth and Returns Through the Cycle 7

8 Entering Next Phase of Strategic and Financial Evolution Operation United Business transformation through operational improvement and customer focus RSC Transformation Became the scale industry leader; achieve benefits through Best of Both philosophy and successful realization of synergies Operation United 2 and Business Mix Delivering on new standard of operational excellence across a more diversified customer base to drive higher, more consistent throughcycle returns

9 2014 Priorities Objectives and Goals Margin Enhancement Growth Through Customer Solutions Apply powerful tools and tangible initiatives to deliver further margin expansion Achieve superior performance by leveraging unique advantages to deliver our customers unsurpassed quality and service Driving Growth and Improving Returns on Invested Capital Capital Allocation Balance organic growth, M&A, reducing leverage, returning cash to shareholders 9

10 Safety as a Core Value Building a World-Class Safety Culture Region-wide Safety Summits emphasizing Safety as a driving force in achieving Operational Excellence Driving a proactive culture based on the analysis and use of leading and predictive indicators Communicating Personal Safety Responsibility expectations Robust Support for Industry Initiatives Launched United Academy, a comprehensive training solution using cutting edge technology unique to our industry Campbell Institute charter membership attained through URI s safety-focused reputation and performance Branch Focused Initiatives Company-wide implementation and measurement of comprehensive training and communications tools Emphasis on targeted communication and training for high-risk jobs and potential hazards 96% of Branches at Zero Recordable Incidents for Q2 10

11 Market Overview 11

12 North American Rental Industry Expected to Grow $Bn % +8% +8% +11% % +12% +11% +9% +6% +0% +6% +5% +19% -1% +9% -23% +8% -3% +6% +8% % 10 $19 $22 $24 $25 $25 $26 $29 $32 $36 $38 $38 $29 $28 $30 $33 $35 $38 $42 $46 $50 $ Non-Residential Recovery to Fuel Rental Expansion Source: IHS Global Insight Forecast 12

13 Key Customers Optimism Returns 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Down Same Up Record Level of Customer Optimism Reported in June (1) Survey of Key accounts only conducted by 3rd party. Approximately 220 surveys conducted each month 13

14 Why Rent Total Cost of Ownership Reasons to Rent Control expenses and inventory The right equipment for the job 24/7 customer care Save on storage/warehousing Reduce downtime Save disposable costs Cost control Equipment tracking No licenses Conserve capital No need for maintenance Compelling Economic Benefit to Rent 14

15 Why Rent Total Cost of Ownership Planning/ Procurement Operating/ Maintenance Needs Assessment Fleet Availability Equipment Sourcing Fleet Deployment Eq. Logistics Operator training PM & Repair Regulatory Compliance Reporting/ Optimization ROI/Performance Analysis Wrench Time Enablement Consumption Management Disposal/ Liquidation Demobilization Decommission/Replace Liquidation Renting Addresses Ownership Pain Points 15

16 Margin Enhancement Applying Powerful Tools to Deliver Further Margin Expansion 16

17 Strong Track Record of Margin Improvement URI EBITDA Margins and Rental Rate Index +13.5pp +19.6pp 42.6% 46.3% % 32.8% 26.7% 30.9% 35.5% PF More Than 1300 Basis Point Improvement, While Rates Still at 2007 Levels Rental Rate Index 17

18 Unique Operating Advantages Support Further Margin Enhancement Best Cost Structure Continuous Improvement Scale Advantage Lean Initiatives/ Operational Excellence Business Mix Metro Model Emphasizing Contribution Margin Higher Utilization Potential 18

19 Lean Processes Drive Real Value Branch Network Rollout in 2014 Will Deliver Efficiencies Pilot Activity Productivity Gains Potential Value Levers Yard Turnaround Time Redesigned Branch Operation Logistics-Created Relevant SOPs Order Accuracy Detailed review of the Order Entry process-implemented simplified SOPs Dispatch & Sourcing Revised Standard Operating Practices increased central dispatch Shop Floor Redesign Redesigned Flow & Created Standardized Triage Process Decreased Outside Hauling Costs Increased Dispatches per Driver Improved Branch Cycle Time Reduced Branch Overtime Costs Shortened Dispute Resolution Time Eliminated Empty Trucks Cost per Delivery Days Sales Outstanding Shop Productivity Time Utilization Targeted Run Rate of $100M of Efficiencies Within 3 Years 19

20 Example: Process Observation Do It Right the First Time Used Basic Lean Tools in Pilot Branches Established Baseline for Branch Network Rollout Identified Waste Value Stream Mapping Implemented Improvements Spaghetti Diagrams Created for Yard & Shop Processes Observation & Documentation Exposes Waste Clear Best Practices emerge Created fast turn lanes to increase capacity Clarified Roles & Responsibilities Reorganized Shop & Yard Flow Increased operational quality at customer touch points Create a Culture of Continuous Improvement Don t pass a defect down the line if it s not right, fix it Customer communication drives customer service Make performance visible allow teams to win daily Balance tasks ensure appropriate roles & responsibilities Pilots Provided Visibility to Value Levers 20

21 Lean Rollout Underway Phase 1 Complete 141 Wave 1 branches, 307 kaizen events at nonspecialty locations 1644 Employee participants 260 Branch Manager Participants Shop and Yard flow focused Order Accuracy Best Practice Roll- Out (OA B-Pro) close to completion by participating locations Phase 1 Results Measurable improvements in Dispatches per Driver per Day Meaningful reduction in the Cost per Delivery Notable improvement in Driver Turn Time Continuous Improvements in Productivity and Customer Experience Q3 Planned Activities Continue events in Kaizen branches Focused on Improving Time Utilization Process Improvement Team Targeted solutions focused on reducing outside hauling and improving customer service A Lean Journey Producing Results 21

22 Stronger Business and Fleet Mix Three Levers to Help Achieve Less Cyclical Mix Residential 4% More Diversified End Market Exposure Non- Residential 45% 51% Industrial/ Non-Construction Larger, More Stable Customers Unassigned Accounts 39% 61% Key Accounts More Specialty Rental Fleet General Rental 81% 19%* Specialty *includes Specialty available at General Rentals 22

23 United Rentals Specialty Business Today Total URI TTM Rental Revenue Key Segments Specialty* EBITDA Margin LT Market Growth 19% Pumps 40 50% 9% Tools ~60% 3 5% 81% Power / HVAC ~40% 4 8% General Rental Trench ~45% 1 5% Specialty Offers Cross Selling Opportunities Internal Estimates *Includes specialty assets at General Rentals 23

24 Cross Sell Delivers Customer Value TSPH & Tools Revenue* 8.1% TSPH/Tools 9.2% 10.2% 10.6% National Account growth of 10% TSPH/Tools National Account growth of 14% Q2 '11 Q2 '12 Q2 '13 Q2 '14 TSPH/Tools Cross sell contributed to ~14% of incremental company National Account growth *TSPH and Tools penetration of NAM revenue; based on select cat classes regardless of location servicing; 24

25 Trench Safety Provides Revenue Synergy Opportunity Largest trench safety rental company in North America Trench is first on the job and supports cross-selling opportunities 5 Trench Safety branches opened in 2013 Trench Safety Annual Rental Revenue Growth 31% 36% 21% 21% 15% FY 2011 FY 2012 FY 2013 Q Q Trench Safety Branches to Open in

26 Power & HVAC Offers Attractive Growth Opportunity Combination with RSC provides revenue synergy opportunity Historically high margin business Business specializes in turn-key services and solutions 13 Power HVAC branches opened in 2013 Power & HVAC Annual Rental Revenue Growth 63% 57% 54% 34% 26% FY 2011 FY 2012 FY 2013 Q Q Power & HVAC Branches to Open in

27 Tools & Industrial Solutions Provides Custom Tool Solutions in Hoisting, Welding, and Tools to Industrial Customers High margins and attractive return assets National Account revenue 70% of total revenue to drive customer entanglement with largest customers Offers total managed project solutions & software to improve productivity and wrench time Increase Customer Entanglement and Share of Wallet 27

28 Growth Through Customer Solutions Achieve Superior Performance by Leveraging Unique Advantages 28

29 Customer Solutions Drive Revenue Growth and Capital Efficiency Engagement Strategy Tailored engagement strategies to meet the specific needs of different customers from large enterprises to small, local businesses Focus dialogue on solutions to increase productive wrench time for customers business Total Control Software solution developed to help customers more effectively manage rental equipment Total Control users gain business advantages focuses relationship on utilization, not rate On-Sites Right tools at the right time guaranteed with onsite personnel to reduce downtime and ensure high-quality, tailored service Deliver Technology-Enabled, Innovative Solutions to Improve Customer Productivity 29

30 Customer Engagement Strategy Company-wide Solutions Reliable Partner Ease of Doing Business Large Industrial Enterprise Agreements Large Commercial Job Site Management Locals Consumption Management Wrench Time Wrench Time 24/7 After Hours Breadth & Depth Availability Reliability Accessibility Value Proposition Tailored to Meet Specific Customer Needs 30

31 Changing the Customer Conversation Laborer Time Study (5-Yr Construction Institute Study) Time is the Biggest Customer Challenge! Other 52% Travel Personal Material Handling Waiting Prep Work 29% 19% Wrench Time Tools & Equip Direct Wrench Time = 29% of a craft laborer s day! 19% of time spent obtaining, transporting & adjusting tools Focus on Wrench Time vs. Rental Rate Source: Construction Industry Institute Research Team

32 Helping Customers Manage Fleet Embeds United as Rental Company of Choice Equipment Utilization 43.0% Software eliminates waste with enhanced visibility/accountability 20.5% Increase equipment utilization Less duplication 6.0% Conserve capital through rental Self Owned Fleet Self Managed Rental Total Control Eliminate equipment maintenance cost Total Control Provides Competitive Edge 32

33 Attractive Added Value for Customers A Meaningful Competitive Edge $ $ Q Q Revenue Grew 16.6% YOY Q Q Q Q Installs began late Q2 with Roll-Out of Total Control Updated Total Control began Rollout late Q2 $ Millions 33

34 On Sites = Up Time Inside the Fence Sites Increased Utilization Leniency for Shared Equipment Lower Equipment Cost On-Time Delivery Guaranteed On Site Mechanic = No Downtime Reduction of Traffic = Safety Better meeting customer s equipment needs High Volume, High Utilization, Lower Cost to Serve 34

35 Fleet 35

36 Fleet Mix Customers Know We Have the Fleet They Need Forks Rough <1% Forks Reach Trench 1% Power Light 2% Other Trucks Welders 1% 9% 16% 4% 5% 40% Aerial $8.42 Billion of Fleet Comprised of Approximately 410,000 Units 3% Forks Industrial 13% Earth Moving 2% 3% Compaction Compressors Serves Diverse Customer Base Note: Percentages based on ending balance as of 06/30/

37 3,100 Equipment Classes with Original Cost of $8.42B Booms and Lifts Earth Moving Forklifts Trench and Other Total (Average) % of Q Rental Revenue Time Utilization* Dollar Utilization** Average Fleet Age*** (in months) 35.9% 12.5% 17.6% 33.9% 71.9% 64.6% 79.6% 55.4% 68.1% 41.6% 45.2% 41.8% 60.4% 47.1% Q2 Dollar Utilization 47.1% * All serialized assets regardless of equipment value (non bulk) included in time utilization ** Calculated using ARA metrics *** Fleet age is calculated on an OEC-weighted basis. Total fleet age is 42.9 months at 06/30/

38 Managing Fleet with a Life Cycle Approach Selling Oldest Fleet Rental Capex and Used Sales ($MM)* Age of Used Sales in Months Q Q ,580 1,390 1,321 1, ($269) ($248) ($363) ($463) ($490) YTD Age Composition ($MM) Time Utilization $9,000 $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $ >9 Total Years 63.7% 67.8% 67.5% 68.2% 67.9% 68.1% Q Q *On a pro-forma basis 38

39 Attractive Asset Economics Sample Asset Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Purchase Price (6,500) Rental Revenue 5,187 5,503 5,668 5,838 6,013 Ancillary Revenue Operational Costs (2,061) (2,130) (2,184) (2,240) (2,298) Selling Price $3,233 Total Cash Flow (6,500) 2,709 3,176 2,937 2,827 6,142 Cumulative Cash Flow (6,500) (3,791) (615) 2,322 5,179 11,291 15,000 Cumulative Cash Flow 0 (15,000) Y0 Y1 Y2 Y3 Y4 Y5 Incremental Asset Generates 40% Return, Helping Drive ROIC Higher 39

40 Maintenance and Growth CapEx 2011 Combined Pro-forma 2012 Combined Pro-forma Forecast OEC Sold** $752 $933 $941 $1,000 Inflation Factor* 13.8% 13.8% 14.2% 14% Inflation Uplift Total Maintenance CapEx $856 $1,062 $1,074 $1,140 Growth CapEx $534 $432 $506 $560 Total Rental CapEx $1,390 $1,485 $1,580 $1,700 A Balanced and Disciplined Approach to Fleet Growth $ Millions *Reflects estimated 2% annual inflation factor compounded over average life of OEC sold **Excludes bulk equipment 40

41 Financial Overview Delivering Strong Sustainable Results 41

42 Q Results Q Rates +4.9% Time Utilization 68.1% +20bps Adjusted EBITDA $663M or 47.4% +$114M or 190 bps Adjusted EBITDA Flow-Through 59.1% Adjusted EBITDA of 47.4%, a Second Quarter Record 42

43 2014 Outlook Prior Outlook Current Outlook Total Revenue $5.45B to $5.65B $5.55B to $5.65B Adjusted EBITDA $2.55B to $2.65B 1 $2.65B to $2.70B Increase in Rental Rates (year-over-year) Approximately 4.0% Approximately 4.5% Time Utilization Approximately 68.5% Unchanged Net Rental Capital Expenditures after Gross Purchases Full Year Free Cash Flow (excluding the merger and restructuring related costs) Approximately $1.2B, after gross purchases of approximately $1.7B Unchanged $425M to $475M $450M to $500M 1 The Company s prior outlook indicated it expected to be near the top of this range 43

44 Consistent Free Cash Flow Generation Over Cycle Cash Flow ($M) Q Q EBITDA ($117) $589 $649 $879 $1,772 $2,181 $496 $1,124 Cash Interest Cash Taxes Gain on Sale of Equipment Goodwill Impairment Charge 1,147 Working Capital/Other Cash from Operations , ,054 Rental Capex ,272-1, ,028 Non-Rental Capex Proceeds on Sale of Rental Proceeds from Sale of Non-Rental Equipment Cash Invested , Excess Tax Benefits from Share Based Payment Arrangements, Net Free Cash Flow (Usage) $335 $367 $227 $23 ($223) $383 $278 $ includes a $55M federal tax refund EBITDA is presented on an adjusted basis includes $150M of aggregate cash payments related to merger and restructuring activities and 2013 include aggregate cash payments of $150M and $38M, respectively, related to merger and restructuring activities. 4 Includes aggregate cash payments of $14M related to merger and restructuring activities. 44

45 Flexible Capital Allocation Strategy Managing Leverage Organic Invest in Growth M&A Return Cash to Stockholders Target leverage range over the cycle of 2.5x 3.5x Net leverage 1 of 3.1x at June 30, 2014 Credit ratings of BBby S&P and B1 by Moody s Continued organic investments to support growth and boost productivity Opened 18 specialty branches in 2013 with plans of approximately 13 additional openings in 2014 Balanced strategy creates flexibility to pursue strategic assets as opportunities arise Expanded role in specialty with completion of National Pump acquisition in April 2014 Executing on $500M share repurchase announced in October 2013 Investing in Growth While Managing Leverage and Returning Cash to Stockholders 1 Leverage ratio calculated as total debt, net of cash, excluding original issuance discounts and premiums divided by adjusted EBITDA. 45

46 Historical Capital Allocation 2010 Q Priorities Debt Issuance 31% Share Repurchases Cash Acquisitions 7% 35% Organic Investment Manage Leverage Targets (2.5x 3.5x) Cash from Operations 69% CapEx 58% Strategic M&A Net Sources of Capital Net Uses of Capital Return to Stockholders 100% Equals $6.4bn Note: Net Debt Issuance includes cash from balance sheet and other items. 46

47 Debt Maturity Profile (1) $2,300 $550 $54 A/R Unused $496 A/R Used $500 (3) 9.25% Senior Unsecured Notes $ % Convert. Notes $1,001 ABL Unused $1,299 (2) ABL Used $ % Senior Secured Notes $1,500 $ % Senior Unsecured Notes $ % Senior Sub Notes $ % Senior Unsecured Notes $1, % Senior Unsecured Notes $ % Senior Unsecured Notes $ % Senior Unsecured Notes No Significant Near-Term Maturities $ Millions (1) As of June 30, Principal amounts only, no OID or premium included (2) Includes $52M in Letters of Credit. 47

48 Leverage Ratio Declined Rapidly (1) 4.6 (2) (3) (4) 2011 URI Standalone Combined Companies 2.5x 3.5x Target Leverage Range (1) Leverage Ratio calculated as total debt and QUIPs, net of cash, excluding original issuance discounts and premiums divided by adjusted EBITDA (2) Pro Forma assumes transaction occurred on January 1, 2011 and excludes cost synergies (3) Pro Forma 2012 leverage assumes transaction occurred on January 1, 2012 (4) Based on Company s projections 48

49 Building a Bridge to Higher Returns* 14% 12% 10% 2.9% 2.3% 0.4% (3.1%) 0.8% 10.8% 10% Internal Hurdle Rate 8% 7.5% WACC Range 6% 4% 2% 0% Rate Fleet Growth 2 and Utilization3 *Illustrative After tax and including goodwill Lean Fleet and Cost Inflation Business Mix/Other (1) Assumes at least 3.5% per year rental rate increase (4) Assumes $100M runrate EBITDA impact from Ops United 2 (2) Assumes 6% annual growth in average fleet size (5) Assumes 2% annual inflation in average fleet purchase prices (3) Assumes 20 basis points improvement per year (6) Assumes 3% annual inflation in all operating costs 49

50 Appendix 50

51 Timeline Forbes Names One of 400 Best Big Companies New Strategy Refocuses Company on Core Equipment Rental Business Expands Industrial Power & HVAC Footprint with Acquisition and Cold-starts Branch Network Grows to 500 Locations in North America National Accounts Program Grows by 50% as Footprint Expands Company s First Centralized Customer Care Center Opens Earns National Recognitions for Support of Veterans Acquires National Pump Founded Achieves Industry Leadership in First Year Launch of E-Rental Store Establishes E-Commerce Platform Expansion of Trench Safety Business Captures Niche Leadership $3 Billion in Revenues Marks a Company and Industry Milestone Customer Training Expands with Launch of National Program Enters Its Second Decade as Industry Leader Launch of Sustainability Program Advances Environmental Stewardship Combines with RSC What a Strange Trip it has Been 51

52 Performance Goals for Senior Executives Align with Creating Stockholder Value 2014 Performance Measures Focus on Profitable Growth Short Term Incentive Plan Measures: EBITDA Dollar Growth Economic Profit Improvement Long Term Incentive Plan Measures: Revenue Growth Economic Profit Improvement ROIC Multiplier Over 60% of senior executives compensation is at risk and subject to these profitable growth measures Field Bonus Performance Measures Align with Senior Management Goals 52

53 Adjusted Earnings Per Share GAAP Reconciliation We define earnings per share adjusted as the sum of earnings per share GAAP, as reported plus the impact of the following special items: merger related costs, merger related intangible asset amortization, impact on rental depreciation related to acquired RSC fleet and property and equipment, impact of the fair value mark-up of acquired RSC fleet, impact on interest expense related to fair value adjustment of acquired RSC indebtedness, restructuring charge, asset impairment charge and loss on repurchase/redemption of debt securities and retirement of subordinated convertible debentures. Management believes that earnings per share - adjusted provides useful information concerning future profitability. However, earnings per share - adjusted is not a measure of financial performance under GAAP. Accordingly, earnings per share - adjusted should not be considered an alternative to GAAP earnings per share. The table below provides a reconciliation between earnings per share GAAP, as reported, and earnings per share adjusted. Three Months Ended Six Months Ended June 30, June 30, Earnings per share - GAAP, as reported $ 0.90 $ 0.78 $ 1.46 $ 0.98 After-tax impact of: Merger related costs (1) Merger related intangible asset amortization (2) Impact on depreciation related to acquired RSC fleet and property and equipment (3) (0.01 ) (0.01 ) (0.01 ) (0.03 ) Impact of the fair value mark-up of acquired RSC fleet (4) Impact on interest expense related to fair value adjustment of acquired RSC indebtedness (5) (0.01 ) (0.01 ) (0.01 ) (0.02 ) Restructuring charge (6) (0.01 ) Asset impairment charge (7) Loss on repurchase/redemption of debt securities and retirement of subordinated convertible debentures Earnings per share - adjusted $ 1.65 $ 1.12 $ 2.55 $ 1.71 (1) Reflects transaction costs associated with the 2012 RSC acquisition and the April 2014 National Pump acquisition. (2) Reflects the amortization of the intangible assets acquired in the RSC and National Pump acquisitions. (3) Reflects the impact of extending the useful lives of equipment acquired in the RSC acquisition, net of the impact of additional depreciation associated with the fair value mark-up of such equipment. (4) Reflects additional costs recorded in cost of rental equipment sales associated with the fair value mark-up of rental equipment acquired in the RSC acquisition and subsequently sold. (5) Reflects a reduction of interest expense associated with the fair value mark-up of debt acquired in the RSC acquisition. (6) Primarily reflects severance costs and branch closure charges associated with the RSC acquisition. (7) Primarily reflects write-offs of leasehold improvements and other fixed assets in connection with the RSC acquisition. 53

54 EBITDA and Adjusted EBITDA GAAP Reconciliation EBITDA represents the sum of net income, provision for income taxes, interest expense, net, interest expense-subordinated convertible debentures, depreciation of rental equipment, and non-rental depreciation and amortization. Adjusted EBITDA represents EBITDA plus the sum of the merger related costs, restructuring charge, stock compensation expense, net, the impact of the fair value mark-up of acquired RSC fleet and the gain/loss on sale of the software subsidiary. These items are excluded from adjusted EBITDA internally when evaluating our operating performance and allow investors to make a more meaningful comparison between our core business operating results over different periods of time, as well as with those of other similar companies. Management believes that EBITDA and adjusted EBITDA, when viewed with the Company s results under GAAP and the accompanying reconciliation, provide useful information about operating performance and period-over-period growth, and provide additional information that is useful for evaluating the operating performance of our core business without regard to potential distortions. Additionally, management believes that EBITDA and adjusted EBITDA permit investors to gain an understanding of the factors and trends affecting our ongoing cash earnings, from which capital investments are made and debt is serviced. However, EBITDA and adjusted EBITDA are not measures of financial performance or liquidity under GAAP and, accordingly, should not be considered as alternatives to net income or cash flow from operating activities as indicators of operating performance or liquidity. The table below provides a reconciliation between net income and EBITDA and adjusted EBITDA. Three Months Ended Six Months Ended June 30, June 30, Net income $ 94 $ 83 $ 154 $ 104 Provision for income taxes Interest expense, net Interest expense subordinated convertible debentures 1 3 Depreciation of rental equipment Non-rental depreciation and amortization EBITDA (A) $ 628 $ 520 $ 1,124 $ 936 Merger related costs (1) Restructuring charge (2) (1 ) 5 11 Stock compensation expense, net (3) Impact of the fair value mark-up of acquired RSC fleet (4) (Gain) loss on sale of software subsidiary (5) 1 1 Adjusted EBITDA (B) $ 663 $ 549 $ 1,182 $ 1,000 A) Our EBITDA margin was 44.9% and 43.1% for the three months ended June 30, 2014 and 2013, respectively, and 43.6% and 40.6% for the six months ended June 30, 2014 and 2013, respectively. B) Our adjusted EBITDA margin was 47.4% and 45.5% for the three months ended June 30, 2014 and 2013, respectively, and 45.9% and 43.4% for the six months ended June 30, 2014 and 2013, respectively. (1) Reflects transaction costs associated with the 2012 RSC acquisition and the April 2014 National Pump acquisition. (2) Primarily reflects severance costs and branch closure charges associated with the RSC acquisition. (3) Represents non-cash, share-based payments associated with the granting of equity instruments. (4) Reflects additional costs recorded in cost of rental equipment sales associated with the fair value mark-up of rental equipment acquired in the RSC acquisition and subsequently sold. (5) Reflects a gain/loss recognized upon the sale of a former subsidiary that developed and marketed software. 54

55 Reconciliation of Net Cash Provided by Operating Activities to EBITDA and Three Months Ended Six Months Ended Adjusted EBITDA June 30, June 30, Net cash provided by operating activities $ 546 $ 469 $ 1,054 $ 878 Adjustments for items included in net cash provided by operating activities but excluded from the calculation of EBITDA: Amortization of deferred financing costs and original issue discounts (5 ) (5 ) (10 ) (11 ) Gain on sales of rental equipment Gain on sales of non-rental equipment Gain (loss) on sale of software subsidiary (5) (1 ) (1 ) Merger related costs (1) (8 ) (2 ) (9 ) (8 ) Restructuring charge (2) 1 (5 ) (11 ) Stock compensation expense, net (3) (19 ) (10 ) (31 ) (19 ) Loss on extinguishment of debt securities (64 ) (75 ) Loss on retirement of subordinated convertible debentures (1 ) (2 ) Changes in assets and liabilities (51 ) (125) (172 ) (236 ) Cash paid for interest, including subordinated convertible debentures Cash paid for income taxes, net EBITDA $ 628 $ 520 $ 1,124 $ 936 Add back: Merger related costs (1) Restructuring charge (2) (1 ) 5 11 Stock compensation expense, net (3) Impact of the fair value mark-up of acquired RSC fleet (4) (Gain) loss on sale of software subsidiary (5) 1 1 Adjusted EBITDA $ 663 $ 549 $ 1,182 $ 1,000 (1) Reflects transaction costs associated with the 2012 RSC acquisition and the April 2014 National Pump acquisition. (2) Primarily reflects severance costs and branch closure charges associated with the RSC acquisition. (3) Represents non-cash, share-based payments associated with the granting of equity instruments. (4) Reflects additional costs recorded in cost of rental equipment sales associated with the fair value mark-up of rental equipment acquired in the RSC acquisition and subsequently sold. (5) Reflects a gain/loss recognized upon the sale of a former subsidiary that developed and marketed software. 55

56 Free Cash Flow GAAP Reconciliation We define free cash usage flow as (i) net cash provided by operating activities less (ii) purchases of rental and non-rental equipment plus (iii) proceeds from sales of rental and non-rental equipment. Management believes that free cash usage flow provides useful additional information concerning cash flow available to meet future debt service obligations and working capital requirements. However, free cash usage flow is not a measure of financial performance or liquidity under GAAP. Accordingly, free cash usage flow should not be considered an alternative to net income or cash flow from operating activities as an indicator of operating performance or liquidity. The table below provides a reconciliation between net cash provided by operating activities and free cash usage flow. Three Months Ended Six Months Ended June 30, June 30, Net cash provided by operating activities $ 546 $ 469 $ 1,054 $ 878 Purchases of rental equipment (695 ) (736 ) (1,028 ) (1,025 ) Purchases of non-rental equipment (34 ) (27 ) (52 ) (41 ) Proceeds from sales of rental equipment Proceeds from sales of non-rental equipment Free cash usage flow $ (38 ) $ (157 ) $ 240 $ 77 56

57 ARA Metrics In September 2011, the American Rental Association (ARA) released Rental Market Metrics whitepaper Standardization of metrics provides consistent way for calculating and reporting critical performance metrics Publication provides definitions and calculations for original equipment cost (OEC), time (physical) utilization, financial (dollar) utilization, fleet age and period-over-period rental rate changes URI adopted new ARA standards beginning with the release of our first quarter 2012 results Standard set of metrics is a sign of growth and maturity of industry Key differences between old URI ( old basis ) methodology and ARA ( new basis ) methodology are as follows: OEC New basis calculation is based on GAAP gross book value. In old basis calculation, OEC is not reduced by volume rebates. In new basis calculation (consistent with GAAP), OEC is reduced by value of volume rebates. For acquisitions, OEC is not reset; OEC values are carried-over from acquired company Time utilization In old basis calculation, OEC excluded serialized assets less than $SK. In new basis calculation, these assets are included. Calculation also changes for new definition of OEC Fleet Age Moving from unit-weighted measure of fleet age (old basis) to DEC-weighted measure (new basis) Rental Rate In new basis calculation, period-over-period rental rate changes are weighted by prior period revenue mix, as opposed to current period revenue mix (old basis). In new basis calculation, impact of currency is excluded from rental rate change calculation 57

58 Corporate Governance Amended Company charter to eliminate Board classes Roles of Chairman and CEO are separated and the Chairman is an independent director 12 of 13 directors are independent Focus on Best Practices Board and each committee have express authority to retain outside advisors Board and each committee perform an annual self-assessment All directors attended at least 75% of the meetings of the Board and committees of which they were a member during the past year Board has adopted stock ownership guidelines for officers and directors Each of the Compensation, Audit and Nominating & Corporate Governance Committees is comprised solely of independent directors Board elected not to renew or extend the stockholder rights plan Three members of the Audit Committee are financial experts 58

59 Convertible Senior Notes How the Convertible Works In November 2009, URI issued $172.5M of convertible senior notes due Notes carry a 4.0% coupon and are convertible at an initial conversion price of $11.11 per share Net share settlement election means par amount paid in cash, in-the-money portion settled in stock or cash The outstanding balance of the 4.00% notes at March 31, 2014 was $97M The company separately entered into hedge transactions which significantly reduce potential dilution associated with the convertible senior notes Hedge transactions effectively increase conversion price to $15.56 per share, subject to change in certain circumstances Hypothetical conversion of $1M: Assumed Stock Price Net Shares Issued Upon Conversion Potential Accounting EPS Dilution $11.11 or below None None $15.56 None 26K shares $ K shares 70K shares $ K shares 80K shares $ K shares 83K shares In Q2 2014, 7.8M shares were included in the diluted share count 59

60 Mechanics of Convert and Hedge Share Delivery at Conversion of $1M Assumed Stock Price $10 Hedge Counterparties 0 Shares United Rentals Net 0 New Shares Issued 0 Shares Investors $75 Hedge Counterparties 5K Shares United Rentals Net 71K New Shares Issued 77K Shares Investors $150 Hedge Counterparties 3K Shares United Rentals Net 81K New Shares Issued 83K Shares Investors 60

61 Glossary of Terms 1. Capex: Capital expenditures represent the amount reported in our statements of cash flows for the purchase of rental and non-rental equipment. 2. Dollar Utilization: Annualized rental revenue, excluding re-rent and ancillary revenue, divided by the average original equipment cost. (ARA methodology) 3. EBITDA: Is a measure of operating performance and is calculated as the sum of net income (loss), income (loss) from discontinued operation, net of taxes, provision (benefit) for income taxes, interest expense, net, interest expense-subordinated convertible debentures, net, depreciation of rental equipment and non-rental depreciation and amortization. 4. Free Cash (Usage) Flow: Free cash (usage) flow is a measure of cash flow available to satisfy debt obligations and working capital requirements, and is calculated as net cash provided by operating activities, less purchases of rental and non-rental equipment plus proceeds from sales of rental and nonrental equipment and excess tax benefits from share-based payment arrangements, net. 61

62 Glossary of Terms 5. Fleet Age: The OEC weighted age of the entire fleet, excluding the benefit of refurbishments. 6. OEC: Original Equipment Cost; the cost of an asset at the time it was originally purchased. 7. Rental Rate: The percentage change in the rate/price that is charged for equipment on rent. Overall company rental rates change based on a combination of pricing, fleet composition and term of rental. This metric is used to evaluate rate changes both year-over-year and sequentially (typically quarter-over-quarter). Rental rate changes are calculated based on the year-over-year or sequential variance in average contract rates, weighted by the prior period revenue mix. 8. Time Utilization: Amount of time an asset is on rent divided by the amount of time the asset has been owned. Also known as physical utilization. 62